Flirting with disaster

Big business is calling for increased spending on disaster prevention. But with climate change set to cause more fires, floods and heatwaves, are we doing enough?

AFTER the deadly summer of 2010-2011, executives at Insurance Australia Group made a decision. Floods had swept through the eastern states, killing more than two-dozen people and causing billions of dollars of damage.

“We have a whole ‘natural perils’ department made up of scientists and engineers who constantly model risk,” says Mike Wilkins, IAG’s managing director. “But it’s bigger than us. We needed to be part of a coordinated national conversation.”

The team began planning a “risk summit”, with 60 invitees from the business world, community groups and government. Together, they took aim at Australia’s record on disaster prevention. They identified two key problems: not enough spending on mitigation and poor land-use planning. Out of that summit, the Australian Business Roundtable for Disaster Resilience and Safer Communities was formed. It comprises a handful of very large and influential corporations: IAG, Westpac, Optus, Munich Re and Investa Property, as well as Australian Red Cross.

The big end of town seems an unlikely champion for the cause, but Wilkins says each of the members sees the consequences first-hand when disasters hit. And above all, so do taxpayers.

The group’s research shows that for every $10 the federal government spends on post-disaster recovery, it spends less than $1 to reduce the risks beforehand.

In a joint statement released last year, the six CEOs said the economic cost of disasters will nearly quadruple by mid-century, rising to $23 billion annually. Wilkins says the costs of disasters could be halved with smart precautionary spending. His group wants the federal government to appoint a national resilience advisor and commit to long-term, pre-disaster spending.

However the roundtable’s figure of $23 billion annually does not even factor in the future impact of climate change. Statistics from Munich Re show that the number of extreme weather “loss events” for insurers in Australia has risen steadily over the last three decades. But Alexander Allmann, the company’s head of Geo Risks, says while anthropogenic climate change has had an impact on losses from weather catastrophes, it’s not yet quantifiable.

Yet last month, the Intergovernmental Panel on Climate Change (IPCC) released two new reports. The first details the impacts of global warming. Among the biggest risks for Australia are more deaths and damage caused by heat waves and wildfires, and increasing frequency and intensity of floods.

It warns of diminishing agricultural production, less fresh water and increasing threats to coastal infrastructure caused by rising seas. A 1.1-metre sea level rise – possible by the end of the century – “would affect over $226 billion of assets” including nearly 300,000 homes.

The IPCC’s other new report says global greenhouse gas emissions rose nearly twice as fast in the last decade than during the 30 years before, and current reduction targets aren’t enough: we’re still on course for 4 degrees of global warming by the end of the century.

The World Bank has warned that if the worst comes to pass, “there is no certainty that adaptation to a 4 degree world is possible”.

The state Environment Minister Ryan Smith declined to be interviewed for this article.

Prime Minister Tony Abbott’s controversial response to the recent IPCC report meanwhile, was this: ‘‘Australia is a land of droughts and flooding rains,’’ he said. ‘‘Always has been, always will be”.

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Earlier this year, the federal attorney-general’s department sounded a similar alarm to the business roundtable. “Existing funding arrangements for natural disasters present a significant fiscal risk for the Commonwealth,” it wrote, to an inquiry into public infrastructure.

Those warnings have now been heeded, in part. On April 28, the federal government issued the terms of reference for an inquiry into the way we spend money on natural disasters. It will be conducted by the Productivity Commission, with a final report by the end of the year.

However, there’s no mention of climate change in the terms of reference for the inquiry.

The risks are not just borne by the Commonwealth. In Victoria, state treasury estimates that the government has spent $4 billion in the last decade responding to bushfires, floods and droughts.

A recent report by Friends of the Earth suggested an even higher figure, at over $6.7 billion, as well as private insurance payouts of more than $13 billion over that decade.

The biggest challenges lie within existing neighbourhoods, according to the roundtable’s research. It says our existing buildings must be retrofitted or, if necessary, relocated, with monitoring done by councils.

In a worst-case scenario, it says, a bushfire could hit the suburbs of Melbourne’s northern fringe, cutting critical electricity lines and contaminating some of the city’s drinking water supplies. We should, it says, be equipping those homes for bushfire resilience – sealing gaps and vents, installing sprinkler systems, clearing around houses – and electricity wires should be buried.

For now, however, it seems we’re only making things worse. When disasters do strike, we build back the way things were. Reconstruction to a higher standard is known as “betterment”. The term has been included in the national disaster relief programme since 2007. But according to the attorney-general’s department, only one betterment project has been funded since then.

Meanwhile, the federal government poured $5.6 billion into reconstruction after the Queensland floods.

“Those billions of dollars have largely been wasted because there was no requirement to spend in a way to reduce the risk of those impacts happening again,” says Dr Jamie Pittock, a flooding and climate change expert from Australian National University.

Pittock says the mistakes of early settlers are being repeated. “Across Australia we’re seeing poor state government regulations allowing local governments to develop land that should never be developed,” he says.

Climate change makes this problem much, much worse: many of these threats are beginning to come harder and faster. We’ve built homes, towns and suburbs in locations at risk of disaster, and those risks are rising.

The outgoing director of the Victorian Centre for Climate Change Adaptation Research , Professor Rod Keenan, says we’ve made progress adapting to some aspects of the climate threat. The long drought and the scorching Black Saturday summer prompted gains in water efficiency, along with better heatwave warnings and bushfire responses.

But overall, we’re still beset by the “notion that ‘she’ll be right, we’ve always had disasters and we’ll deal with them when the time comes’,” Keenan says, “rather than anticipating and planning to avoid the worst impacts”.

Even when we do consider the threat of floods and fires, we’re neglecting to account for the way global warming alters the risks. When Pittock and his colleagues analysed four major reviews commissioned after the 2010-11 floods, they found that the documents “virtually ignored the issue of climate change and its impact on flooding; some reports didn’t refer to it at all”.

Pittock says our estimates of flood frequencies are already unreliable and climate change makes them even less certain. This matters, because it makes hard defences such as levees, which are often favoured by governments and insurers, more risky.

“If you miscalculate or are over-optimistic about flood frequency, you can make the situation far worse,” he says. The better alternative is to allow rivers room to flood, while relocating or raising infrastructure and homes. “Countries like the United States, the Netherlands and China are pulling down levee banks,” he says.

“It’s about time Australia learnt from that. There’s an upfront cost, but once you’ve invested in a more resilient strategy, the benefits accrue over decades or longer.”

Professor Keenan says he’d like to see communities holding informed discussions to pinpoint local risks and responses. Governments could fund their adaptation ideas by bringing forward recovery spending.

“This matters because we can save lives,” he says. “We can reduce the impact of disasters on people’s livelihoods. And we can reduce the financial impact on the state government, so it can continue to spend money on hospitals and schools and public transport services.

“It’s far more sensible to invest a smaller amount of money now, rather than pay out more down the track when disasters happen.” Keenan says while it’s disappointing that the state government hasn’t allocated funding to his centre, he’s hopeful it might have a change of heart.

But Professor Jean Palutikof, the head of the National Climate Change Adaptation Research Facility – which is funded by the federal government and based at Griffith University – cautions that its very hard to put money into preparation for a disaster, ‘‘because no government can easily justify the expenditure on something that hasn’t happened’’.

Her words are borne out by the state government’s Climate Change Adaptation Plan, released just over 12 months ago. It allocated only $6 million in new spending, mostly in grants to local councils. The plan also failed to impose any requirement that climate change be taken into account in planning or infrastructure decisions. It won’t be revised until 2016.

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Creswick flooded three times in the disastrous summer of 2010 and 2011. The deluge took the small town, north-east of Ballarat, by surprise. But its predicament – both before and afterwards – illustrates the challenges replicated around the country.

In the 1850s, settlers had diverted the creek so they could extend the main street. “The lower end of town is built just about entirely on the flood plain, and no one realised,” says Don Henderson, the Mayor of Hepburn Shire, and a local builder in Creswick. The council was “totally unprepared” for the floods, he says, as were the catchment management authority and emergency services. Years on, the floods’ consequences have lingered. Some insurers no longer offer policies for low-lying homes.

A council flood recovery office, opened on the main street, has only just closed its doors. It guided reconstruction works worth $30 million across the shire, including levee banks along the Creswick Creek, only just completed.

For the council, the influx of federal cash has seemed like an act of god. Although only required to rebuild as things were, it has made a point of lifting its standards, Henderson says. For instance, it could have never have afforded to rip out the drains under local roads and replace them with bigger ones. ’’With the recovery funding, we were able to say ‘Yes this caught us with our pants down, but into the future we’re designing this town to be resilient’.”

Even so, the new level of flood protection – decided in consultation with the community – leaves some townsfolk exposed.

Like so many of our disaster inquiries, the new Creswick flood modelling and mitigation plan doesn’t mention climate change, or take the increasing risk of extreme weather into its rainfall predictions, or cost-benefit analysis.

Russell Castley lives at Semmens Village, a pocket of 32 public housing units across the creek from the main street. They’re vulnerable to rising waters from three directions. During floods, the road becomes submerged, blocking both ways out.

“Really, these units should never have been built here,” Castley says. He climbs the low mound near his home and points at the gaps. The levee system is designed to guard against a 1-in-50 year flood, without accounting for the shifting climate.

“I’m 74 now,” he says. “I don’t know whether we’ll have another flood here in my lifetime. But I think the floods will become more frequent and possibly more violent, and I don’t believe this levee bank will protect this complex.”

After consultation on the town’s flood plan finished, a team from the Victorian Eco-Innovation Lab, at University of Melbourne, arrived with a different approach: scenario planning.

They presented locals with three stories outlining the livelihoods of different people in Creswick in 25 years time, based on plausible but severe climate projections. Then, they asked how residents wanted to adapt.

The responses were distilled into a series of future visions, and displayed online and in shop windows on the main street.

In one, the creek is returned to its original course by 2025. Low-lying land becomes a commons and flood-prone homes and businesses are moved uphill to the railway station. In others, the town converts its historic post office to a ‘Resilience Centre’ and constructs a water storage network to guard against drought.

“When you’ve got an uncertain climate and radical changes in the pipeline, our old planning standards become a liability,” says Che Biggs, who led the research project. “We don’t know the exact likelihood of extreme events in the future and we never will. It’s time to stop asking for certainty before we begin to adapt.

“It makes more sense to explore what can go wrong by using worst-case scenarios tailored for different regions. With the right process, communities and agencies can have these conversations without pointing fingers. “Otherwise, we’ll wait and see what hits us, then start the blame game afterwards.”